New APH Option for 2012 Crop Insurance

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Beginning with the 2012 crop year, producers purchasing federal crop insurance for corn and soybeans will have the option to use the trend-adjusted actual production history (TA-APH) yield endorsement on their crop insurance policies, rather than the standard APH. The TA-APH option is available on a county basis in 14 states – including Minnesota, Iowa, Wisconsin, North and South Dakota – including most major corn- and soybean-producing counties in the region. In total, approximately 820 counties are eligible for the TA-APH endorsement for corn, and 880 counties are eligible for the option with soybeans. The TA-APH will likely be quite attractive to many Midwest corn and soybean producers. The decision regarding the TA-APH endorsement must be made by the 2012 crop insurance enrollment deadline for corn and soybeans in the Upper Midwest, which is March 15, 2012.

The APH yields have been used for many years to determine crop insurance guarantees for both yield protection (YP) and revenue protection (RP) policies. The APH yield is determined by a minimum of four years, and up to a maximum of 10 years, of actual yield history on a crop insurance unit. If there are more than 10 years of yield history, the most recent 10 years are used to determine the APH. If there are less than four years of APH yields, then pre-set T-yields are used until there is a four-year history.

For many years, corn and soybean producers in high-production areas have felt that the 10-year average APH yields used for crop insurance guarantees were not reflective of current yield potential that exists due to enhanced seed genetics and improved production practices. Producers also felt there was sometimes a yield penalty on farm units with a longer yield history, due to more recent yield increases. The TA-APH being introduced by the Federal Crop Insurance Corporation (FCIC) should help improve these issues on corn and soybean crop insurance policies for the coming crop year.

The TA-APH yield adjustment factors are made on a county basis, based on historical annual increases in county-average corn and soybean yields, as calculated by the National Agricultural Statistics Service (NASS). Most counties in south-central and southwestern Minnesota have a TA-APH yield adjustment factor of 2.2-2.5 bu./acre for corn, and 0.35-0.50 bu./acre for soybeans. Producers should check with their crop insurance agent for the TA-APH yield adjustment factors in their county. A producer’s actual APH yields (four to 10 years) for each year are then used with the county TA-APH adjustment factors to arrive at a final TA-APH yield.

The TA-APH yield adjustment factor is added for each year of production history, up to a maximum of 10 years. For example, if the yield adjustment factor for corn is 2.5 bu., then 2.5 bu. is added for the most recent year (2011), 5.0 bu. is added for the preceding year (2010), and 7.5 bushels per acre for the year before that (2009), etc. The maximum yield adjustment for year 10 (2002) would be 25 bu./acre (2.5 bu./acre x 10 years). The TA-APH yield does have a yearly maximum, or cap, for any given year during the four to 10 years that are used to calculate the final TA-APH. The yield cap for any year is the highest reported yearly yield during the four to 10 years plus the yield adjustment factor. For example, if the highest reported corn yield on a farm unit was 190 bu./acre, and the yield adjustment factor was 2.5 bu., the cap yield for any year, after adjustments, would be 192.5 bu./acre.